McGregor and Khabib broker settlements with NAC prior to Tuesday hearing

January 29, 2019

The Las Vegas Review-Journal reports that Conor McGregor and Khabib Nurmogomedov have brokered settlements with the Nevada Athletic Commission prior to Tuesday’s hearing.

McGregor and Nurmogomedov were on the agenda for the monthly commission hearing to discuss punishment for October’s post-fight fight at UFC 229.  The melee saw the commission withhold Nurmogomedov’s purse in light of his actions.  It later reviewed video which also assessed liability to McGregor for his part in the post-fight altercation.

According to the report by Adam Hill, settlements were also reached with Khabib’s teammates Abubakar Nurmagomedov and Zuabaira Tukhugov.  Both were involved in the UFC 229 fracas.

The settlements have you to be disclosed although Bennett confirmed the settlement agreements.  The report indicates that the commission will agree to the settlement.

Payout Perspective:

Swift and without further discussion is likely what the UFC wanted to do with the settlement negotiations for the fighters.  One would think an ample fine and a suspension that will allow for each fighter to return by July’s International Fight Week is likely the forecast.

Report indicates “more than 525,000” new ESPN+ subscribers as a result of UFC debut

January 28, 2019

The Sports Business Journal reports that ESPN gained  more than 525,000 new subscribers as a result of the UFC debut on the network.

With its debut at Barclay’s Center in Brooklyn earlier this month, the company scored big (even with a delay) with the UFC.  The prelims drew nearly 2 million viewers with big numbers in other demos including the important A18-49 column.

The article reports on ESPN’s strategy of pushing its digital brand by handing out black “ESPN +” t-shirts for fans to wear during the UFC event at the Barclay’s center. It was part of a fan festival to bring in the company’s new partner.  It also had a special suite for press to show off its capabilities.

According to a press release from ESPN disclosed a day after the event the UFC Prelim card on the network drew 1.4 metered market rating which was the highest-rated UFC Fight Night Prelims on cable since 2013.  It also received over 568,000 subscribers of the ESPN + service where the early prelims and main card were aired.

Payout Perspective:

The latest disclosure in the SBJ article released on Monday indicates that there were approximately 43,000 subscribers that signed up for a trial version and then cancelled.  Yet the retention rates are superb considering the debut on ESPN did not have huge names.  It does seem ironic that the Flyweight division was featured yet, could be on the precipice of extinction.  A thing to monitor is how and if ESPN will continue to disclose these subscriber numbers (similar to how WWE has done it) and the retention rates.  Based on the debut, it looks like this could be the start of a promising partnership.

 

Proposed dates for further UFC Antitrust hearings won’t happen until August or September

January 21, 2019

If you were hoping for a resolution to the UFC Antitrust Lawsuit in 2019, we have some bad news for you.  It’s unlikely to happen.

A letter filed by the plaintiffs on Friday indicates that both sides won’t make an appearance in the courtroom until this fall.

Letter Re Scheduling by on Scribd

In December, Zuffa filed its Motion for Summary Judgment but prior to any decision, the Judge wanted to understand more of the information offered by the experts, specificially plaintiffs’ expert, Hal Singer.  The parties were to meet and confer on available dates.

As one might expect, lawyer calendars (as well as the Court’s) are packed.  Thus, the first available scheduling option proposed is for August 26-30, 2019 with Dr. Singer and UFC’s expert, Dr. Topel.  In the alternative, they proposed an evidentiary hearing which would start September 9th or 16th.

Payout Perspective:

Clearly, the Court moves at a glacial (without global warming) pace.  Clearing schedules for attorneys, the Court and the experts is quite hard and if you thought this was going to end this year, you (and I) were wrong.  Even with these hearings, there are the prospects of renewed motion for summary judgments and the class certification hearing (to determine if the case deserves class action status).  MMA Payout will keep you posted.

Update on Wilder-Povetkin appeal

January 16, 2019

When we last wrote about the Deontay Wilder-Alexander Povetkin lawsuit, Wilder had filed its appeal brief in which it sought the 2nd Circuit Court of Appeals to overturn the District Court decision which sided with Povetkin.

The legal drama has been long and winding and despite a jury trial that determined that the Russian boxer had taken Meldonium after January 1, 2016, the trial court sided with Povetkin’s attorneys after the WBC, the boxing governing body, had reversed course on its belief that Povetkin had taken Meldonium.

You had to wonder what was the court thinking?

The issue of money deposited in a trust account still remained a question.  Upon the court siding with Povetkin and his promoter, they demanded the $4.3 million held in escrow.

The Court opinion sided with Povetkin on the basis of the Bout Agreement entered into was the deciding factor.  It cited language in the World Boxing Council’s Rules and Regulations which stated that “any dispute or controversy” would be bound by the WBC.

Another layer of this dispute revolves around purse money placed in escrow for the fight.  Wilder had written the escrow company to hold the money until a court decided the outcome.  Povetkin and World of Boxing objected to this and sued claiming a violation of the duty of good faith and fair dealing.  In addition, they claimed that Wilder had violated the terms of the Bout Agreement and should be subject to a liquidated damages clause of $2.5 million.  Wilder was due $4.5 million to fight Povetkin while Povetkin was due $1.9 million.  In addition, there was a $715,000 bonus for the winner.

While Povetkin and his promoter claimed that they were the winners and should be entitled to the money sitting in escrow, Wilder appealed the ruling citing issues with the trial court ruling.

Our rundown on Wilder’s appeal brief from this past October is here.

In November, Povetkin/WOB’s attorneys filed its answering brief to essentially agree with the trial court’s ruling which negated the jury trial’s ruling and request that the appeals court vacate the jury verdict.

The attorneys argue that there was no breach of the Bout Agreement by the Russian as the contract vests discretion in the WBC to make all the decisions relating to the bout.

The focus of Povetkin’s brief cites that the WBC issued a supplemental ruling in November 2017 which stated that “it is not possible to ascertain that Mr. Povetkin ingested Meldonium after January 1, 2016.”  The basis was in line with the trial court when it sided with Povetkin in stating that the contract for the fight with Wilder contained no language “mandating that each fighter refrain from ingesting banned substances.” It would defer to the WBC on these matters on whether or not an athlete breached the contract.  This ruling set aside the authority of the trial court and deferred it to the WBC.

The power quote utilized by Povetkin in its response to Wilder’s appeal brief was that “the parties specifically agreed that the WBC’s decision on this question [anti-doping] would be conclusive.”  Povetkin’s attorney cite a NASCAR case which ruled that it should follow NASCAR’s rules.”  It also cited the Tom Brady Deflategate case as the District Court “improperly invaded the contractual authority of the NFL Commissioner.

The basis of Povetkin’s argument that the appeals court should uphold the trial court’s decision is based on its interpretation of the contract which indicates that the WBC is the arbiter of all claims under the Bout Agreement.  As a result, since it determined that it could not conclude that Povetkin ingested Meldonium post-January 1, 2016, he did not breach the contract.

This conclusion seems sound in a vacuum.  The court should defer to the contract.  But it doesn’t seem to harmonize with the factors in this case.  Namely, Povetkin’s failed drug test in April 2016 and the subsequent cancellation (or postponement) of the Wilder fight.  Perhaps the key issue here is whether the bout was cancelled or postponed as Wilder believed it to be cancelled while Povetkin argues it was postponed.

Povetkin argues that the bout was a postponement and it was not a breach.  It cites the Bout Agreement with the WBC rules which states that a scheduled fight may be “rescheduled…or postponed by the WBC.”

In addition, Povetkin’s attorneys argue that the trial jury decided an immaterial fact indicating that the question presented to the jury was whether Meldonium was ingested by Povetking post-January 1, 2016, but the Bout Agreement was not signed until April 11, 2016 and “there is no contractual provision covering the parties conduct prior to execution.”

Povetkin also stakes his claim to the money in the Escrow Account which was to award the purse amounts to each fighter as well as the commission fees.

Finally, Povetkin argues that it should be awarded fees for the anticipatory breach of Wilder.  The claim is that Wilder wrongfully repudiated the Bout Agreement by not showing up in Russia prior to the fight in May 2016.  Instead, Wilder flew home from his training camp in England once he learned that Povetkin had failed a drug test.  Povetkin claims that the bout was to be postponed but Wilder breached the Bout Agreement by treating it as if the bout was cancelled.

Wilder will have a chance to respond to Povetkin’s appeal brief once more prior to oral arguments which should happen later this year.  MMA Payout will keep you posted.

Drug maker in Lyman Good lawsuit moves to dismiss case for alleged destruction of evidence

January 5, 2019

The supplement company that UFC fighter Lyman Good has sued for allegedly causing him to fail a USADA drug test is now moving for his case to be dismissed because the evidence is no longer available.

Defendatns Gaspari Nutrition, Inc. and Hi-Tech Pharmaceuticals filed the Motion to Dismiss on December 14th claiming that Good or his lawyer intentionally destroyed the supplement that was the cause of his flagged drug test.  Good faced a two-year ban for violation of the UFC Anti-Doping Policy but it was reduced to six months as he was able to pinpoint the source of the failed test.

Good tested positive for a banned substance in an October 14, 2016 out-of-competition test.

According to legal filings, Good was able to deduce that he had added two supplements since his last USADA test which came up negative for any banned substances.  One of these was Anavite sold by Gaspari Nutrition and made for Gaspari Nutrition by Hi-Tech.

Attorneys for Gaspari Nutrition and Hi-Tech Pharmaceuticals claim that Good did not name Anavite as one of the thirteen substances that he was ingesting at the time of his failed USADA test.   They also cite that the bottle of Anavite that he used which failed the drug test is gone.  He first claimed he gave it to his attorney but his attorney later denied this.

Dismissing the case is a sanction premised upon the spoliation of evidence.  It is not a necessity that the Court dismiss the case, but it’s the defendant’s contention that either Good knowingly destroyed the bottle of Anavite, gave it to his attorney who claims he no longer has it and/or misplaced the evidence.

Defendants identify issues with Good’s previous Complaints which had factual errors as reasons which bring his reputation and veracity into question.  They note that after he failed the October 2016 USADA test, he had a duty to preserve the bottle of Anavite as evidence.

Payout Perspective:

In Good’s Opposition Brief due January 18, 2019, his attorney (and manager) David Fish, will have to address why he should not be disqualified as Good’s lawyer in this case.  Fish represented Good when working with USADA to determine the reasons for the flagged drug test.  Since Good indicated that he gave the bottle to his attorney but he stated he does not have it, the question of what happened to it is being raised by Defendants.  While this is a clear case of shifting the blame and issue, Defendants may have a viable argument since the attorney might have to be called as a witness.  As an attorney and officer of the court, if he had the bottle, he would have to provide it to the other side.  Good states that the bottle of Anavite was tainted with the banned substance.  Defendants want to access the bottle to determine for themselves.

The Court does not have to dismiss the case if the bottle of Anavite is not present, but they could choose another sanction in lieu of this if it is determined that the destruction was done on purpose or negligently.

MMA Payout will keep you updated.

MMA Payout Year in Review: No. 9 – NLRB denies Leslie Smith claims against Zuffa

December 26, 2018

The 9th MMA Payout Story of the year is Leslie Smith’s Charging Letter to the National Labor Relations Board in which she claimed that she was discharged by the UFC for her attempt to organize fighters via Project Spearhead.

Smith, a women’s bantamweight, was known for her work with the Professional Fighters Association and then launched Project Spearhead.  She actively recruited current UFC athletes to sign cards which would allow the NLRB to conduct a vote to determine if the fighters could be considered employers of the UFC.

In April 2018, she was scheduled to face Aspen Ladd at UFC Fight Night: Atlantic City.  However, Ladd missed weight and Smith declined to fight at a catchweight.  It was Smith’s last fight on her contract and she sought to see if she could obtain a contract renewal with a monetary raise as well as fighting on the card.  The UFC did not negotiate, paid Smith her show and win purse and terminated her contract.

In May 2018, Smith filed a Charging Letter with the NLRB claiming that she was terminated due to her work with Project Spearhead.  It appeared that there was potential for success as the Regional Office determined that Smith’s claims had merit.  Her case was then moved to the D.C. Office as Smith’s lawyer claimed that this was done as a political favor by the Trump Administration on behalf of Dana White.

In September 2018, the D.C. office dismissed Smith’s claim arguing that there was no evidence which showed she was dismissed due to the protected activity of organizing fighters.  Rather, the NLRB believed it to be more of a contractual dispute that reached an impasse.  Smith appealed the decision arguing that there were several factual misstatements and omissions in the opinion which should overturn the decision.  But the NLRB upheld the decision affirming Smith’s decision lacked merit.

The only recourse at this point would for Smith to file an appeal with the U.S. Court of Appeals.

Payout Perspective:

Smith has gained some publicity this year with her fight as she was featured this fall on an episode of Full Frontal with Amanda Bee.  As many speculate, the NLRB administration decisions are political dependent on the administration in charge.  Smith had viable claims against Zuffa but there was not enough proof according to the NLRB in D.C.  This is disappointing since the regional office had concluded that Smith’s claims had merit.  It would be interesting to see if another appeal is made on her behalf.  At this point, Project Spearhead and the attempt to organize fighters lives with fans, but not with fighters.  We shall see if there is any more movement from Smith or other fighters in 2019.

MMA Payout Year in Review: No. 10 – The UFC Antitrust Lawsuit rolls on

December 26, 2018

MMA Payout is doing its annual review of top business stories for the year.  The first story we take a look at is the ongoing Antitrust lawsuit which had several key developments this year.

First, Judge Boulware denied Zuffa’s Motion for Summary Judgment on Friday, December 14th.  It did not decide on class certification on the day as the Court made it clear it wanted to hear from the experts in the case for him to determine if there was a viable case on the part of the Plaintiffs.

Earlier this year, experts for Plaintiffs and Zuffa issued the experts reports in this case.  The reports assessed things such as the liability of Zuffa and potential damages.  Zuffa, of course, shot down these arguments asserted by Plaintiffs’ experts.  They, then filed a motion to exclude Plaintiffs’ expert citing (in general) that the opinions did not follow traditional scientific opinions.  A bulk of the reports were sealed as the experts reviewed confidential information.

Plaintiffs also filed for Class Certification, a requisite of Class Action status.  Zuffa opposed the motion.  At this time, this motion is on hold pending Judge Boulware hearing more on the subject from the experts.

As discussed about on Show Money in December, it appears that the lawsuit will come down to Plaintiffs’ expert’s assertion that the way to determine antitrust injury is based on “wage share” versus “wage level.” Wage share, adopted by Plaintiffs’ is looking at the wages of athletes in comparison with the revenues of the company.  Wage level, adopted by Zuffa, is looking at the wages over a period of time and not in comparison with company revenues.  Clearly, a wage share outlook would favor Plaintiffs if they are asserting that their salaries have been artificially depressed due to anticompetitive measures by Zuffa.  Wage level would favor Zuffa since its clear that salaries have increased over time.

Payout Perspective:

Do not look for the resolution of this case in 2019.  Even if Judge Boulware were to dismiss this case, Plaintiffs would seek to appeal the decision.  Zuffa would do the same if there would be an unfavorable ruling for its case.  The only way this case would end in 2019 is if the parties decided to settle the issue short of trial.  While this would be out of the question, if the Judge were to impose his will on the parties to settle, I would foresee this happening.

Did Dana White inadvertently help Michael Chiesa’s lawsuit against Conor McGregor?

December 23, 2018

The attorney for UFC welterweight Michael Chiesa filed an Amended Complaint earlier this week in his lawsuit against Conor McGregor. In this amended version, Chiesa cites New York’s “Son of Sam” Law which states that McGregor should not be able to benefit from his crime.

Chiesa is suing McGregor (technically his company) and the Barclay’s Center for the April 5, 2018 incident in which he threw a dolly at the bus carrying several UFC fighters including Chiesa and Khabib Nurmogomedov. As a result of McGregor’s action, Chiesa was bloodied from shattered glass and had to be taken off the card. According to the amended complaint filed on December 20th, Chiesa was to be offered the opening spot against Khabib Nurmogomedov but for his injury. Chiesa claims that when Max Holloway was unable to fight, a UFC executive texted him about the possibility. Its presumed that the text was sent prior to knowledge of Chiesa’s health status and that he would have taken the fight.

The “Son of Sam” law in New York was made to prevent criminals from profiting from the publicity of their crimes. The law was named after serial killer David Berkowitz, known as “Son of Sam,” gained fame in the mid-1970s for his crimes. There was widespread speculation that Berkowitz would profit from his murders by selling his story to be made for a book or film. As a result, New York passed a law preventing someone from profiting from their crimes.

McGregor was charged with multiple crimes and while he was acquitted of his wrongdoings, Chiesa claims that the law would apply since the law relates to those charged of crimes.

Here, Chiesa is claiming that McGregor has made money off of this incident. The complaint notes McGregor selling his whiskey, “Proper 21,” during his UFC 229 press conference. Also, included in the lawsuit, was McGregor’s quote from the press conference that he knew that he was going to go after Khabib that day. There is also the use of the footage to build UFC 229 and Dana White’s proclamation that his use of it was part of the story and build for the fight.

518314 2018 Michael Chiesa … by on Scribd

UFC 229 was the highest-grossing PPV in the company’s history with a reported 2.4 million buys.

Chiesa’s amendment to his lawsuit, if agreed by the trier of fact, would mean that he could feasibly claim McGregor’s part of his reported earning from UFC 229 and/or sales from Proper 21.  While its not clear how the law would apply and if there would be a disgorgement (giving up the money) of profits by McGregor, it puts the welterweight with an interesting legal argument.

Payout Perspective:

It’s an ingenious strategy to utilize the “Son of Sam” law here especially when Dana White was adamant that they utilize the bus footage in its build for what became the biggest PPV in the history of the UFC.  McGregor sold “Proper 12” at the pre-fight press conference and a lot of conversation surrounded the April incident at Barclay’s.  While McGregor may claim that the press built this up themselves, we have White explicitly stating his reasons to promote the attack.  Thus, it was generated by McGregor’s actions and facilitated by the UFC.  It will be interesting to see if McGregor blames the UFC for its use of the footage or not.

McGregor’s attorneys had filed a motion to dismiss certain claims including Chiesa’s claims for negligence, negligent infliction of emotional distress and intentional infliction of emotional distress.  With the amendment of his lawsuit, this may make McGregor’s attorneys have to retool its motion to dismiss as one might assume that the new claim regarding the Son of Sam law would likely be addressed in a motion to dismiss by McGregor.

MMA Payout will keep you posted.

NLRB denies Leslie Smith appeal affirming the claims lacked merit

December 21, 2018

MMA Payout has obtained the NLRB denial letter provided to Leslie Smith’s attorney after their attempted appeal of Smith’s charge that her contract was terminated due to the protected activity of trying to organize athletes.

The letter, dated September 19, 2018, states that Smith’s charge “lacks merit.”  The letter affirms its original decision as it states, “[t]here is significant evidence suggesting that the breakdown in contract negotiations in April 2018 occurred for nondiscriminatory reasons related to her demands.”  The NLRB weighed Smith’s offer to the UFC in which she requested an extension and raise in April 2018 after she learned her opponent for the last fight on her contract did not make weight as evidence that this was more of a contract impasse than a pretext to terminate her contract.  Smith was public with her attempts to sign up fighters for Project Spearhead, an organization which is making the attempt to bring fighters together for better work conditions.  Instead of attempting to negotiate with Smith, the UFC decided to end their contract with her.

Leslie Smith UFC NLRB Dismi… by on Scribd


Smith and her attorney made the salient argument that under the terms of the Bout Agreement, she should still have a fight left on her contract.  Yet, the NLRB did not address this point.  Rather, the fact that they concluded that Smith’s contract ended and was not related to her efforts to organize fighters.

Smith’s Charging Letter seemed promising when she filed it last spring.  An initial determination from the Regional Office determined that Smith’s claims had merit.  However, soon after the ruling, her case was sent to Washington D.C. for review.  In September, her claim was dismissed.  The subsequent appeal was made and the letter essentially closes her case.

At this point, Smith’s recourse would likely be filing an appeal with the U.S. Court of Appeals.

Show Money Episode 25: The Vegas Field Trip and Uncle Dana reveals some numbers

December 21, 2018

I joined John Nash and Paul Gift to talk about their coverage of the UFC Antitrust Hearing on December 14th and discuss the Kevin Iole piece in which Dana White revealed salaries and PPV buys.  Enjoy.

You can find the audio here.

 

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